Welcome to the sixth edition of our financial services newsletter; viewpoint. In this edition of viewpoint we discuss managing stakeholder relationships. With a focus on consumers, we discuss customer needs and how well the banking sector manages the different dimensions of customer relationships, making comparisons with the rest of the industry and other service based sectors. We hope you find it an informative read. For more information about our financial services research team visit the Financial Services Research section on our website. Don't forget, you can access previous editions of viewpoint by visiting our newsletter archive.

1. ISSUE 6 - May 2012
viewpoint
Keeping you connected to today’s UK financial services market
Welcome to the sixth edition of Within financial services we trade institutions they can trust and
viewpoint, Harris Interactive’s upon the relationships that we which provide good value, as can
UK financial services newsletter. hold with our customers or be seen in the table below.
clients. We all know these
What may be more of a revelation
In this edition of viewpoint we discuss relationships are formed and
is that after providing an excellent
managing stakeholder relationships. re-evaluated on a constant basis
service it is the softer more
depending on how well we
With a focus on consumers, we discuss emotional characteristics that
service customer needs.
customer needs and how well the dominate. For example,
banking sector manages the different However, what do consumers consumers are also looking for
dimensions of customer relationships, really want from a financial financial institutions that treat
making comparisons with the rest of
the industry and other service based services provider? How well is the customers fairly, act responsibly
sectors. banking sector performing? And and have friendly staff. Given that
how well does it compare to other these ‘emotional’ needs are so
This edition was researched and written by sectors within the industry and prevalent it leads me to ask the
Philip Brooks, Senior Associate Director, beyond? question, how many financial
Financial Services Research Team.
organisations are actually focusing
pbrooks@harrisinteractive.com Understanding Customer Needs
on such needs, when designing
It’s no surprise that consumers
their products, services or
want to deal with financial
communications?
All bank
Consumer needs when selecting a account Consumer needs do vary bank by bank,
financial services organisation holders examples of which are listed below:
They are trustworthy 74%
They provide good value 74% They provide good value
financial services organisation
Importance when selecting a
They provide excellent service 67% - First Direct 86%
They treat their customers fairly 67% Treat customers fairly
They really care about their customers 55% - the Co-operative 84%
They act responsibly 52%
Really care about customers
They staff are friendly 48% - the Co-operative 73%
Offer a wide range of products & services 38%
Wide range of products / services
They are ethical 36%
- HSBC 49%
They are relevant to you personally 32%
They are up-to-date 30% Ethical
- the Co-operative 65%
They have a large branch network 27%
They have a strong online presence 21% Strong online presence
They are a leading company 19% - First Direct 36%
Base: All those with a bank account (1,918) - Respondents could select up to ten attributes from a list of 19
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2. Issue 6 | May 2012
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What stands out and signals the similar differences by brand exist. In Managing customer relationships
importance of these ‘softer’ traits to particular the AA, Tesco and LV= effectively is not simply about
me is that offering a wide range of stand out from the crowd within integrating the latest technology or
products and services is only slightly motor insurance. software, nor is it just about data
more important than being ethical. mining and finding out who your
So even on the most basic level we most profitable customers are. Nor
In fact being ethical and relevant to can see the power of brand and dare I say it, is it about a market
you personally is more important communications and how they have research project. All of the above
that being up to date, having a large a role to play managing the are simply enablers.
branch network or having a strong customer relationship.
online presence. When you actually sit back and
They help set customer expectations consider what you are trying to
There was a time when being big, even within those categories that manage, i.e. what customers think,
having a large retail branch network many see as a commodity product. how they feel and how they will act
and large number of cash machines Of course, we have to accept that in the future you begin to see the
was particularly attractive; in fact there may be a bit of post enormity of the task. Most
that is how I chose my bank. Today rationalisation here. Despite this, businesses can target effectively and
those needs are less prevalent and clearly some banks are attracting design products to meet rational
consumers are now looking for customers who have distinctive needs, but unless a business truly
something different, and needs do rational and emotional needs. understands what makes their
vary bank by bank. customers tick, it will struggle to
Managing Customer Relationships connect emotionally.
Some are looking for a deeper Many organisations talk about how
emotional relationship with their they have ‘consumer centric’ Effective customer relationship
bank, one that goes beyond trust processes, some even shout about management is not a process, it’s a
and fits with their lifestyle and how they have recently integrated culture. That’s why alongside
priorities. Some others simply want their legacy systems into a single welcoming innovation and change,
a bank that delivers good products customer voice or have developed a having customer centric values such
and services, the channels of customer segmentation to help as fairness, trust and respect
delivery are far less important. them effectively target profitable engrained into the ethos of an
customers. organisation are so important for a
When analysing consumer needs by
their main bank, it is clear to see Engagement is just one ingredient of Employee Performance and
that the communication strategies of Organisational Success
both the Co-operative and First
Direct are working. Both have either
managed to attract customers Selection Direction Engagement Effort Enablement
aligned to their strategy or have Attract, select, You know You want to You’re trying Work systems
effectively communicated what they on-board, exactly what do it because your absolute and support
promote the hardest to
you are fully maximise
stand for to their customer base and those that organisation
bought in deliver for your effi-
is out to
make it an important point of best fit your achieve and rationally and success ciency
culture and what part you emotionally
differentiation. values play
Interestingly, within the credit card
and general insurance markets,
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financial services company these
days. Harris Interactive Stakeholder Relationship Framework
Overall Likelihood to
It’s only when customer centric Performance Recommend Likelihood
values become part of the Rational to Continue
organisation’s DNA that we can Index Using
truly begin to see through
customers’ eyes, design products Customer Relationship Intentional Vendor of
and services around their holistic Score Index Choice
needs and begin to understand and
improve the third dimension of the Competitive
Emotional
relationship which is how they Advantage
Index Ensures a
intend to behave. Value Me as Trustworthy Unique
a Customer Relationship benefit
It’s not just the sales, marketing and
operational teams that have a role How the Financial Services Sector Performs
to play here. The HR department
Relationship Rational Emotional Intentional
alongside Finance (both often Score % % % %
overlooked) have critical roles too.
Banks 52 49 51 54
The HR department not only needs
Credit Cards 49 50 46 50
to carefully develop the desired
business culture, it also needs to TV Subscription Companies 48 47 43 53
maintain it by recruiting and training Mobile Networks 48 49 44 51
individuals that share the same
values and behaviours. Both tasks Home Insurance 45 46 45 43
are a lot more difficult than they Car Insurance 43 47 44 41
sound. Finance needs to ensure all
financial information is up to date, Energy 38 37 38 39
accessible and most importantly in a
format that people understand.
overseas call centres and general today? Using our Stakeholder
It’s the collaboration of all these outsourcing of back office Relationship Framework, we placed
functions that helps an organisation administration. some questions on our Harris Poll.
maximise its success. A business
that works in silos is mortally The media has also had a field day Despite the current negative
doomed. as the big banks cut back on their perceptions of the industry, when
retail branch networks, leaving some comparing to other service based
So how well does the banking towns without a bank alongside past sectors the banks certainly hold
sector perform? scandals of irresponsible lending, their own.
Historically, the banking sector PPI, overdraft charges and ATM
cannot claim to have a strong charges. Rationally, apart from the much
reputation for service and putting maligned energy sector, there is very
customer interests first. We were But how do consumers think, feel little difference across the board.
one of the first sectors to embrace and act towards their main bank Banks are particularly strong
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4. Issue 6 | May 2012
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emotionally, and outscore both the Overall Relationship Score
mobile and TV subscription sectors,
which may be deemed more
engaging. Regardless of the The Co-operative First Direct Nationwide All Banks
baggage that the banking sector
has, it is clear customers still have 76% 67% 66% 52%
faith in their own bank which is
Rational - 73% Rational - 71% Rational - 62% Rational - 49%
perhaps something the industry - Satisfaction 71% - Satisfaction 56%
- Satisfaction 81% - Satisfaction 76%
should use in some way. Clearly - Recommend 65% - Recommend 66% - Recommend 53% - Recommend 43%
Components
enticing customers with cinema
Emotional - 77% Emotional - 57% Emotional - 67% Emotional - 51%
tickets, film downloads and giving - Values me 80% - Values me 61% - Values me 64% - Values me 49%
priority to concerts is not as - Trustworthy 74% - Trustworthy 54% - Trustworthy 70% - Trustworthy 52%
successful as general day to day Intentional - 78% Intentional -70% Intentional - 68% Intentional - 54%
interactions at building an - Provider of Choice 81% - Provider of Choice 84% - Provider of Choice 75% - Provider of Choice 61%
- Continue Using 86% - Continue Using 73% - Continue Using 74% - Continue Using 63%
emotional connection, even if they - Unique benefit 69% - Unique benefit 54% - Unique benefit 55% - Unique benefit 36%
are delivered at an arm’s length.
So who is leading the way within
the banking sector? How would you rate your bank in each of the following areas?
The Co-operative, alongside both The service they provide
First Direct and Nationwide are
Treating you as an individual
performing much stronger than the
Ability to solve problems
rest of the sector (as can be seen
opposite). Value for money
Clarity of communication
All Banks
All have succeeded in targeting Responsiveness
customers who have particular Understanding, empathy of staff The Co-operative
rational and emotional needs. They Staff knowledge First Direct
have also effectively communicated Relevance of communications received
Nationwide
what they stand for and have Staff professionalism
delivered against it. Interestingly, Range of products/services they offer
the Co-operative, First Direct and
Offer new/innovative products & servic es
Nationwide are the only banks who
Ease of communicating with them
can really claim to provide a unique
Amount of communications received
benefit to customers.
30 40 50 60 70 80
Having something distinctive about % Excellent/Very Good
you is obviously beneficial from a
brand and acquisition point of view, When looking at the performance performs best on the majority of
but it also helps in terms of data above and comparing it to the attributes?
maintaining customer relationships. overall relationship scores above, it
It can act as a permanent reminder leads me to ask the questions? • Why is the relationship score for
as to why a customer joined you in Nationwide so close to First Direct?
the first place and therefore help to • Why is the Co-operative leading
reduce churn. the market when First Direct clearly First Direct has clearly created a
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5. Issue 6 | May 2012
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whole proposition based around Role of Communications professionalism of staff. Despite
being transparent and delivering a However, we must not underplay this, NatWest is yet to prove that
strong service. However, the the role of communications within there is anything unique about
emotional bond it has with its the financial services sector. having a relationship with it.
customers is not as strong, perhaps
due to its ties to its bigger parent Communications play a massive role Customer relationships are
company, and its route/channel to not only in acquiring new business constantly re-evaluated based on
market. Interestingly the levels of but also in helping to reinforce the what they see, hear and experience.
trust for both HSBC and First Direct key reasons why a customer As the industry reduces 'facetime'
are pretty much identical. selected the organisation in the first with its customers and as direct
place. interaction reduces, service
Conversely Nationwide, perhaps perceptions will become more and
due to its mutuality, has created a NatWest through its customer more the reality. Companies need
strong emotional bond with its charter and its ‘Helpful Banking’ to be as consistent and memorable
levels of trust and although its campaign, clearly is using as possible when they are delivering
service is not at the same level as communications to help reinforce people based service as its
First Direct and the Co-operative it key brand messages amongst its importance is likely to be
is still well ahead of the industry customer base and it appears to be heightened for consumers.
average. If the Nationwide can working.
build on its current performance As the ‘human touch’ reduces,
and get more customers to NatWest has started to pull away service failures will be remembered
recommend it, it will be in a very from the other major players on for longer as the next staff
strong position indeed. both rational and intentional interaction could be a year or more
dimensions. Its communications away. Ask yourself, when was the
The Co-operative has created a have also been supported by higher last time you went into your local
compelling proposition around its performance scores for branch or contacted your bank
ethical and sustainable behaviour, responsiveness, relevance of by phone? Therefore, more than
developing a culture that is communications and ever before, to ensure healthy
embedded into its DNA. It has done
an excellent job bonding with
customers on all three dimensions
rationally, emotionally and All Banks
intentionally. Rational: 55%
Satisfaction Likelihood to 52%
recommend
There is no doubt the Co-operative’s
61
Relationship Rational - 49%
48
positioning has helped to create a Score: - Satisfaction 56%
strong emotional bond with its Emotional: 54% - Recommend 43%
customers. The Co-operative does Values me Trustworthy Emotional - 51%
things differently, it provides a 56 52 57% - Values me 49%
- Trustworthy 52%
unique benefit to being a customer Intentional: 61%
and its service is also perceived to Intentional - 54%
Provider of Continue Unique - Provider of Choice 61%
be very strong. choice using benefit - Continue Using 63%
- Unique benefit 36%
72 75 36
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6. Issue 6 | May 2012
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customer relationships are there is the support available if growth. As such customer
maintained it’s important that something goes wrong. relationships certainly cannot be
financial organisations deal with explained by a single metric.
customer complaints well, through That’s a prime example of how you
multiple channels. can successfully manage
relationships in a service based
Social Media industry following a negative Researched and written by Philip
Whilst you can control what you say experience. From a very quick scan Brooks, Senior Associate Director,
Financial Services Research Team.
about yourself, it is important to of Twitter I noticed First Direct,
pbrooks@harrisinteractive.com
understand and manage what NatWest, Virgin Money and the Twitter: @MrResearcher
people are saying about you. Co-op all actively doing the same
thing. I only managed to find a
Who remembers in 2007 HSBC handful of insurers, which is
having to abandon its plan to scrap disappointing, and even fewer credit To find out how we can help your
interest-free overdrafts for students card companies. organisation measure its
leaving university due to a facebook Stakeholder Relationships contact:
campaign – I think this was the first A poignant tweet by
instance of social media changing @MarketforceRB about a paper Debbie Senior
the policy of a financial organisation. delivered by @rodbutcher at a Senior Consultant, Stakeholder
recent conference really drove this Research
However, negative interactions with home to me “Gone are the days dsenior@harrisinteractive.com
customers via social media can lead when we can choose when and how
to a positive final outcome. we receive customer feedback.” John Backhouse
Recently, I wasted a day sitting at Senior Associate Director,
home waiting for a BT engineer to So how can we improve the Employee Insight and Performance
turn up and I was struggling to get relationships we have with our jbackhouse@harrisinteractive.com
the situation resolved. Born of customers? Clearly we need to
frustration, and to be quite honest ensure products and services meet
wanting some sort of revenge, I customer needs and expectations, Links to further information:
tweeted about the negative but relationships are more holistic
experience I was having. and complex than that. Organisations Stakeholder Relationship Research
also need to behave how they would for Financial Services Organisations
Donna from the @BTCare team like to be perceived.
contacted me and handled the Harris Interactive Stakeholder
situation superbly, taking total Ultimately it is how we make Relationship Model
control, and resolved it to my customers feel, think and act upon
satisfaction. Despite what had all three dimensions (rationally,
happened, I actually think more emotionally and intentionally) via
highly of them now than I did our products, services and brand
before. I now feel reassured that and communications that drive
For further information related to this article, such as the background data, or to suggest new topics for
inclusion please email financial@harrisinteractive.net or call +44 (0)161 242 1360